Check Fraud – Real, Rampant and Preventable

People are willing to talk when there is a meaningful give and take in the conversation, a win-win for an investment of time.  When discussing software options with several alarm dealerships, I found a significant number of business owners were not aware of the benefits of a banking solution commonly called Positive Pay.  This topic gave me something of value to offer in return.

An alarm business is not created overnight.  Long hours are required to nurture a financially viable business.  Unfortunately, this care and effort may be seriously impaired or even destroyed suddenly through check fraud.

A stolen bank check can be recreated in exact detail and redirected to a different payee, because the necessary technology to do so is easily accessible to anyone.  With the sheer volume of checks processed daily across the automated Federal Reserve system, opportunities exist for theft of paper checks, because there is necessary need for manual handling at critical junctures.

Everyone who issues computer generated checks or hand-written checks is vulnerable.  Without safeguards in place, there is no sure way to prevent this fraud.  Having a special pantograph or photocopy protection is of limited value.

Typically, a stolen check is transferred to evade tracking by law enforcement.  At some point, a skilled craftsperson creates a “new” check with a different payee, which surfaces several states away.  If the other information required by the Federal Reserve is accurate on the forgery, the altered check passes right through the automated system.  The amount of the payment is listed on your bank statement and ties in correctly with your check register.  Your records appear to be happily balanced.  You may not realize what happened until your vendor calls for payment, maybe weeks later.  Ouch!

A reasonable solution exists to protect your hard-earned money.  Most banks offer a simple program called Positive Pay.  The subscriber creates a list of checks, including voids, and uploads the list through a secure portal to the bank usually as a csv or txt file.  The list includes check number, check date, amount, account number, and most importantly, the correct payee.

Your bank will compare all checks to the list as they are presented for payment.  If the check does not match perfectly, payment will be denied by the bank unless you approve it through the online portal.  It is critical that your list of checks is exact in all details, as Positive Pay is largely an automated verification process.

This is where AMS Pro by Alarm Management Software can help.  Our standard interactive view of accounts payable checks can be preset to create a csv file.  Preparing a perfect file is quick and an easy upload to the bank, because the csv file is created directly from your accounts payable database.  Your checks are honored without additional intervention, and you sleep at night, knowing that Positive Pay will stop any check fraud right in its tracks.  Your alarm business software makes it easy to administer payments and takes the pain out of the process.

You carry insurance to protect your hard assets.  Consider Positive Pay as an insurance policy to protect your cash in the bank.  Call you bank today to see how easy it is to get started.  Then call us at Alarm Management Software to learn how we can help you grow your business, safely and with confidence.

Click here for a short video.  This is not an endorsement of Regions Bank, nor are we associated with them.  The video is presented for educational purposes only.


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